BOSTON (AP) Massachusetts must upgrade its highway department or face the possible loss of more than $200 million in federal highway funds, according to a published report.

The Massachusetts Highway Department must hire 268 workers for its construction division — a 50 percent increase in staffing for that branch — and increase training for employees who inspect construction materials, the Federal Highway Department said in a July report, a copy of which was obtained by The Boston Globe.

Federal officials also are requiring MassHighway to provide a list of supervisors and engineers for each new road or bridge project that receives federal funds.

“It is absolutely critical for the [state Highway Department] to achieve a staffing level sufficient to properly oversee the construction contracts,” Stanley Gee, district administrator of the Federal Highway Administration, wrote in a July 8 letter to MassHighway Commissioner John Cogliano.

The report, drawn up following a two-year review of MassHighway that began in July 2001, also said 16 of 27 engineers or inspectors at one district office were not qualified to perform their jobs, and along with putting motorists at risk, poor construction will lead to a faster deterioration of roads and bridges.

Engineers design parts of projects, and inspect sites to ensure that contractors adhere to specifications called for in the original plans. Inspectors are trained to sample and test the materials used on sites, such as checking the quality of the concrete.

MassHighway has hired 83 engineers since May at annual salaries ranging from $35,000 to $40,000, according to agency spokesman Jon Carlisle. He was unable to tell the Globe what MassHighway budgeted to cover the hiring demanded by federal officials, which comes as the highway department’s budget was cut as a result of the state budget crisis.

According to the report, while the number of active MassHighway projects increased approximately 40 percent between 1988 and 2001, the number of engineers, inspectors and other construction site personnel at the district level decreased by approximately 30 percent.

While acknowledging MassHighway is underfunded, the report called for better benefits and incentives to retain workers, including increasing pay scales to make them more competitive with the private sector.

The highway department employed more than 4,000 in 1990, according to Construction Industries of Massachusetts, a trade group, but has just approximately 1,800 employees today, with just 400 in the construction division.

“The reductions of staffing over the years has caused a lack of what we see as proper oversight, which gives free rein to contractors and can lead to the waste and fraud and abuse of taxpayer dollars,” Mary J. Richards, president of the Massachusetts Organization of State Engineers and Scientists, said in an interview with the Globe, which was published Sept. 25. Approximately 1,200 members of the organization work at MassHighway.

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